Home-based Businesses

Most (62%) of active small businesses are start-ups, independent contractors or sole proprietors where people are increasingly operating a business at home or out of their home.

A home-based business, also known as a Home Occupation, will commonly be:

• the base for a business e.g. a tradesperson working out of their home base and onsite at the client’s premises
• the place of business e.g. a hairdresser working mainly at their own home
• a consultant or contractors with a home office, often visiting clients
• the base for an online business

Key points when starting a home-based business or home office for your business:

• suitability for clients, employees, neighbours and neighbourhood
• planning permits, licences and zoning
• business and WorkSafe insurance
• claiming tax deductions for work related home expenses
• lease agreements
• Occupational Health and Safety (OHS) at your house
• hours of operation
• contact and address details for your clients
• how to still network with other businesses?

Check the Events Calendar for Starting a Business Information Sessions for small and start-up businesses that cover some of these topics.

Local council and planning scheme permit requirements for home businesses

Contact the local council planning department (see Local Council) to get their guidelines for home-based businesses (home occupations) and the local Planning Scheme. See Clause 52.11 of the Victoria Planning Provisions.

See home-based business FAQs including: Do I need a planning permit to operate a business from home?

Building permits for your at home business and office space

If setting up the business means you have to do some building work you may need a building permit. Contact your council's building department or a registered private building surveyor. See the permits & zoning page for contacts and guidance.

Registrations and licences

When working from home some businesses require special registrations or licences, as well as a council planning permit. Read the FAQ What type of business can I run from home? for further advice.

Insuring a home-based business

A common misunderstanding among home-based businesses is, because they’re operating from home, they are adequately covered by a domestic Home and Contents insurance policy. Some important tips:

• read more about Business Insurance to better understand what policy you will need.
• public liability insurance is recommended
• WorkSafe Injury Insurance is compulsory if you have employees
• private sickness and accident insurance for home businesses that do not qualify for WorkSafe.

Tax deductions for a home-based business

The Australian Tax Office (ATO) website has a range of online guides and calculators to assist small businesses with their tax obligations. Home-based businesses should use the tax guide booklet, Carrying-on a business at or from your home, and the deduction claim tool, Home office expenses calculator. Read more about tax deductions in the Tax basics for business operators information sheet.

Address and contact information for your home business

You will need to provide contact information for your clients, suppliers, invoices and receipts. If you do not have customers and clients visiting then you may want to avoid providing your home address. Address options include:

• PO Box set up a post office box or locked bag with Australia Post. Aus Post also offers a paid notification service, Mail2Day™, so you'll be updated when mail needs to be collected
• private mailbox services you will receive a street number address if you want to avoid offering a PO Box as your address
• virtual office this option can simply provide a street address and answering service, but can also provide printing, copying and courier services as well as boardroom and meeting room hire. There are many business centres offering virtual office facilities throughout Victoria.

You may also need to organise an extra phone line for business calls. A separate phone line helps keep business costs separate for taxes and reporting. An answering service can help provide a professional appearance if you are busy with a client or on the road and unable to answer your phone.

Check the Events Calendar for Virtual Office Information Sessions for Small and Start-Up Businesses.

When the business grows – moving to an office, shop, incubator

When your home business is ready to expand a financial adviser or small business counsellor is a valuable source of business experience and often the best way to avoid costly (often hidden) planning errors. Some accountants also offer business coaching. Small Business Mentoring Service is also helpful when planning changes to your business.

When you're ready to expand your business, you have several choices:

• extend the house. This adds value to your house, but traffic, noise and parking might be a problem
• move to a different house
• lease premises, share an office or work space. See Leasing Retail or Commercial Premises 
• find a local business incubator. Typically, they provide space for a number of businesses under one roof with business support including capital, coaching, common services, and computer networking connections. A business incubator’s main goal is to produce financially sound firms.
  Council websites often provide a good overview of business activity in their area and support for home-based businesses. This can be helpful to identify your competition and plan how you will market your products or services. Go to Find your Local Council for complete details of all Victorian councils including their websites. 

Use Business Victoria's resources and guides to help cover the main points of setting up your home-based business premises.

Step-By-Step: Setting up a Business From Home Complete this guide to get answers to home-base business questions like: How suitable is my home? Do I need a building permit? Can I have employees? What insurance do I need?

	Setting up a home-based business (PDF 131Kb)
	A guide to: businesses which do and do not need a council planning permit; setting up your home workspace; registrations and licences you may need; allowable tax deductions; additional insurances which may apply; and networking you can tap into.